1st Mariner Bank - Keeping up with The Joneses

by Kevin Lynch 13. June 2011

I recently attended the Net.Finance conference in Chicago . It is, by far, one of the best conferences for those of us focused on the digital channels of financial services. Over the two and half days, there were three topics that dominated the event: Mobile, Personal Financial Management (PFM) tools, and Social Media. I'm going to specifically talk about the first two topics.

The first day of the conference focused on Mobile Banking services for  customers. Jeff Dennes, SVP Chief Digital Officer of Huntington National Bank (and formerly with USAA), gave the Keynote address. His presentation was full of interesting observations including:

  • There are over 285 million mobile subscribers in the US, a 91% penetration rate.

  • 13.2 million people accessed their bank accounts through mobile sites, up 70% from a year ago.

  • The expansion of the 4G network over the next 2 years will increase bandwidth equal to a cable modem at home.

  • Mobility is driving convergence. The gap between the traditional web and related services is closing, with the increase in smart phones and the movement of the Gen Y's into the workforce.

Jennifer Wilson, SVP Internet Channel Director, BBVA Compass shared her experience with the introduction of ZashPay, a Person to Person payments service from Fiserv. From an adoption perspective, they found that building a web page with a simple enrollment process was key. When they looked at the user base, they found a surprising number of small business customers who were using as an alternative to more expensive ACH services. Given these pilot results, they may develop a mobile invoicing service for their business customers.

We rolled out our Mobile Money offering in August, 2010 and have seen a significant adoption rate. Mobile continues to be a hot topic among financial services providers and may prove to be the most signficant game changer in the next couple of years.

On the second day of the conference, I was fortunate enough to be part of a panel discussion on Personal Financial Management (PFM) along with Patrick Smith of Wells Fargo, Eric Connors of Yodlee, and Edward Chang of Strands. We had a lively discussion about the benefits of PFM for our customers, the challenges of getting people to use it, and the pros and con's of aggregation services. While the benefits are pretty clear (better financial management) the biggest challenge, as noted by Patrick, is inertia. Managing your finances is certainly important, but not critical. Setting up goals and budgets falls somewhere around cleaning out the gutters on the "to do" list. The key, perhaps, is to help educate the consumers about the benefits to make it move up that list.

One of the classic differences between 1st Mariner and Wells is the approach to aggregation. Wells provides tools that help manage those accounts that are with Wells while we offer a service (Mariner360) to add all your accounts, even from other institutions. Perhaps this highlights the major difference between big and small banks. We see this as a service that is the right thing for the customer, while they look at it from an internal perspective of what is right for the organization. We (of course) think ours is the better approach.

Credit Scores: GPAs for Adults

by Wade Barnes 10. May 2011

Improving Credit Score

Your credit score impacts every major (and some minor) purchase that you'll make during your lifetime. In regards to making a purchase that requires financing, (i.e. a house or car) your credit score can dictate the applied interest rate and in some occurrences, can prevent you from being eligible to receive financing at all. How about the impact on your career? Nowadays, many employers run credit checks before hiring.

Do you want to own a car, buy a house, have a career and be an all-around self sufficient individual? Mmm. Not much thought required there, huh? Of course you do!

So what is the best way to tackle this overly-exciting subject matter?

We asked our very own Wade Barnes, Vice President of Consumer Lending, to run through the ins and outs of a credit score with a word that we think will be all too familiar to you - the dreaded GPA.

"Professor" Barnes, meet the world.

The world, meet "Professor" Barnes.

700 - or above- is the score (or grade) that will get you on the honor roll of society. Like GPAs, credit scores are simply a numerical ranking of your credit performance.  The best way to think of a credit score is like a grade in school.  There are many parts to this grade like tests, quizzes, homework, participation, and attendance.  The teacher then weighs each factor in accordance with its importance and determines a final grade or score.  Credit scores are no different and look to the following factors. 

Not everything is treated equal - the return of "weighted averages."

35% of your overall credit score is determined by your Payment History, which is the single most impactful factor of your credit score. Be sure to make your payments on time every month. If you’re having issues paying your bills talk to your lender. Many lenders will work with you to help establish favorable terms for both you and the lender.

Next on the list is outstanding debt, holding a 30% weight.  It is important that you don’t carry high balances on your credit cards.  Carrying balances of less than 35% of your available credit limit is ideal.  Balances using 70% of your credit limit or greater are having a negative impact your score.

Weighing in at 15% is the length of time the accounts have been established.  It is helpful to have accounts with a long history reporting to the credit bureaus established.  For revolving accounts that have been managed well, consider keeping these accounts open so they continue to build history.

At 10% each, inquires and credit diversity are the least impactful but are nonetheless important to consider.  Be sure you aren't authorizing lenders to pull your credit report needlessly – keep this in mind when you’re checking out at your favorite retail store where they offer a discount for opening a store credit card.  With regards to diversity, be sure your debt instruments are spread amongst various loan products.  An individual who has a car loan, credit cards, and a mortgage will rate better than an individual who simply has multiple credit cards.

Is the test going to be graded on a curve?

Yep. Just like finals, these factors are scored on a curve type system where your performance is compared directly to other individuals.  Scores range from 350 – 850 where anything over 700 is good and anything under 600 needs improvement.

Be Aware

Perhaps the most important tip is to be aware of what’s on your credit report.  With over 290 million reports, mistakes are bound to happen.  You are entitled to receive a free copy of your credit report from each of the reporting bureaus every year.  To obtain your credit report, visit www.annualcreditreport.com , an official site sanctioned by the bureaus to allow you free access to your report.  Put this on your calendar and make it an annual practice.

As always, feel free to reach out with any questions you have about your credit score or any other credit question.

Considering a Fixed Annuity for your maturing Certificate of Deposit? Not sure how they stack up against one another?

by Marylove Moy 26. April 2011

Recently, we sent out a Fixed Annuity (FA) mailer to our 18-month Certificate of Deposit (CD) customers. We did this in hopes of offering our customers an alternative option in the event that their Certificate of Deposit is nearing maturity.  With that being said, we thought there might be other folks out there (including those who received the mailer) that could be asking themselves, "What's the difference and more importantly, which one is the most beneficial for me?"

To answer this question, we went to our very own Marylove Moy, Program Director of 1st Mariner Financial Services, to see if she could shed some light on that matter. 

The Experienced Financial Advisor's Opinion.

Both (CDs) and (FAs) are considered savings vehicles, normally used to accumulate wealth: but there are key differences between the two options. 

Safety of Principal

Both are considered appropriate choices for the conservative investor. CDs are usually issued by banks and therefore offer the FDIC backing up to $250,000. Annuities, on the other hand, are issued by insurance companies; they are backed by the financial strength of the issuing company (regardless of dollar amount). Ratings agencies, such as S&P and Moody’s, provide critical information in assessing a company’s financial situation. 

Interest Rate

As a rule, CDs guarantee a rate of return for a period of time; many factors determine this rate. Fixed annuities can offer either a fixed rate for a predetermined contract term or a rate that adjusts periodically during the term. Annuities – unlike cds – offer a minimum floor interest rate that is guaranteed irrespective of market conditions. 

Tax Considerations

For those individuals concerned with minimizing taxes, a fixed annuity is an attractive option. Interest on a FA accrues on a tax-deferred basis; an investor is taxed on this interest only to the extent that it is withdrawn from the contract. This fact can – in the appropriate circumstance – reduce the taxes paid on an individual’s Social Security benefits.  On the other hand, the investor faces a 10% penalty on the interest withdrawn if he/she is under the age of 59 ½.  If you have tax related questions, please consult your tax advisor. 

Liquidity/Investment-term horizon

As a rule, a CD is the preferred option for those investors with a short term investment time frame. If an investor redeems a CD early, he/she is normally subject to penalties.

Fixed annuities usually offer the investor access to interest earned on the contract or a certain percentage of the contract value. It is critical for the investor to understand that interest withdrawn from an annuity contract is taxable at this point. Additionally, should the investor surrender the contract before its maturity date, surrender charges can apply (depending on the fixed annuity type, these surrender charges may or may not invade the contract principal)

Estate Considerations

Proceeds from a fixed annuity bypass the probate process; that is to say they go directly to the beneficiary once the contract is surrendered with proper documentation. The proceeds are not delayed by the court processing of the estate.


  

 

 

Program Director
1st Mariner Financial Services 

 

Still confused?

No worries.  Marylove and her team of Financial Advisors would be happy to help answer any questions or concerns that you still have.  Feel free to contact our Financial Services Department or call us at 410-558-4200. 

Please contact your financial advisor. Securities offered by 1st Mariner Financial Services, and Investment Advisors are registered with UVEST Financial Services, member FINRA. UVEST is independent of any financial institution. Securities (1) are not deposits of this institution; (2) are not insured or guaranteed by the FDIC or any other governmental agency; (3) are not obligations of, or guaranteed by, any financial institution; and (4) involve investment risks, including the potential for fluctations in investment return and the potential loss of principal.

 



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